Australian Federal Budget 2021-22: An expert analysis

Intro: Hello, and welcome to the CPA Australia Podcast, your weekly source for accounting, education and career, and leadership discussion.

Jane Rennie: Hello, welcome to CPA Australia's coverage of the 2021-22 Australian Federal Budget. I'm Dr. Jane Rennie, General Manager, External Affairs at CPA Australia. I'd like to begin by acknowledging the traditional owners of the land around Australia and to pay my respects to their elders, past, present and emerging. I'd also like to welcome all Aboriginal and Torres Strait Islander people who may be listening or watching today. It's Wednesday, the 12th of May. And I'm joining you from Canberra, where I travelled to attend yesterday's budget lock-up. I'll be your host for today's discussion of key aspects of the budget announcements with a focus on tax business and Superannuation Measures. Joining me from CPA Australia's Melbourne office, our Senior Manager, Taxation Policy, Elinor Kasapidis, and Senior Manager of Business and Investment Policy, Gavan Ord. Welcome Elinor. Welcome Gavan.

Elinor Kasapidis: Thank you, Jane. It's great to be here.

Gavan Ord: Thank you, Jane. Great to be here as well.

Jane Rennie: In the lead up to the budget, CPA Australia called on the government to pursue expansionary fiscal policies focused on short-term economic recovery, longer-term economic transformation and environmental sustainability. Before we get into discussing some of the specific aspects of the budget papers, I think it's interesting to reflect on the economic circumstances that we currently find ourselves in. Gavan, it's only seven months since we sat down to discuss the last budget. And I think it's fair to say those economic circumstances are considerably rosier than they were this time last year.

Gavan Ord: Well, that's correct, Jane. If you look at the budget papers from October 2020, they're expecting a budget deficit of this year of 213 billion. We're now forecasting a budget deficit of just over 160 billion, which is obviously a very large number, but it's still 50 odd billion better off than what they expected. Now, this is primarily due to two circumstances. The economy is going better than expected. So unemployment is not as high as what they thought so less people are taking unemployment benefits. On the other side, tax receipts are up. And a lot of that has to do with iron ore price and the corporate tax receipts that come from the iron ore price. So the economy is looking better than what they thought. Business confidence is up. Unemployment rate is lower than expected. So the government entered this budget in a better financial situation of what they expected. That doesn't mean there's no risks. And that's why the government is still pursuing an expansionary budget. COVID is still very much with us at this point in time.

Jane Rennie: And I'll ask a bit of a follow-up question on that one, because if tax revenues are up and consumer confidence is up and consumption is up, Elinor, why is it appropriate to still keep injecting large doses of money into the economy?

Elinor Kasapidis: You know, COVID has, I think brought a lot of uncertainty. And while the rest of the world is still being ravaged by COVID-19, the responses are really varied, both on health and economic fronts. It's in the interests of our government. And we need to recognise that they did respond really well last year, JobKeeper and the Stimulus measures were really quite effective at protecting Australians. And so, if they continue down that path and just keep people's confidence up and not necessarily put on the brakes, because at moments of uncertainty and when you're looking at perhaps in the next few years of just having to monitor the situation, I think the message to the Australian people and to Australian businesses is one of confidence and support. And that's really, really important right now.

Jane Rennie: Now this is a bit of a gnarly topic. A lot of people are calling this an election budget. To what extent do you think the possibility of an election on the horizon has shaped the budget agenda that we've got? Who would like to tackle that one first?

Gavan Ord: I'll go first. And so, all budgets are political documents and they reflect what the government intends to do. So obviously, that's in the back of any government's mind when they deliver a budget. That's not a criticism, that's just a reality. But I still think as Elinor said that this is the right budget for the time now. It's about boosting confidence in the economy. It's about supporting the economy, which there's still areas where it's not going so well. If you get past the political aspects of it, I think it's definitely the right budget at the right time. And obviously, there are elements where we were disappointed, but overall, I think it's very much appropriate. I don't know. We very much welcome boost to the economy, as we say, at a time where still uncertainty still prevails.
Jane Rennie: Elinor, would you agree with that assessment? Is it the right budget for right now?

Elinor Kasapidis: I think so. It's a really diverse budget. And when you look at the policy development space, you look at the Royal Commissions, you look at all of the reviews that have happened, you can see a lot of the ideas and recommendations that have evolved from those consultations and those hearings actually having a theme throughout the budget documents. So the sense that I get is that, while on some fronts it sometimes takes a bit of a push for the government to prioritise certain issues, once they realise that something needs to be done, there's actually a wealth of experience and knowledge and work that's been done over the years that forms a really good policy platform that the government can then work through those suggestions and propose and announced the ones that they think are right for now.

Gavan Ord: I kind of just go back and just sort of reiterate a point around it was right for the government to continue the expansionary fiscal policy at this time. If there were to withdraw that support too early, that could have detrimental effects on the economy. So, I just think they've got the right approach. And as I want to just say it, there's quite a lot of things in this budget which have been worked on for many, many years. And it's really good to see some of those things come through in this budget.

Elinor Kasapidis: And after a horrendous 2020, I think positivity and responsiveness and people feeling that at least there's something in it for them. Sure, maybe they might want a little bit more, maybe it's sort of wait and see how these things evolve. But where people can see themselves in a budget, I think that's really important for maintaining that confidence and that sense of connection to government.

Jane Rennie: Well, another label that's being applied to this budget and this time by the government is that it's a job's budget. And jobs fig is the latest figures I believe came out on the day the budgets hand it down are in fact looking quite good. But Gavan, are there some trouble areas of employment?

Gavan Ord: That's really an interesting question because there's a couple of elements to that. Yes, unemployment is still sitting around about 5.6%. The JobKeeper hasn't resulted in a huge drop-off in number of employees, which was some people expected including treasury, forecast 100,000 and 150,000 people to lose their jobs. The data doesn't seem to back that up at this stage. But the other side of the equation is with border closures, many industries are actually suffering labour and skill shortages. So, there are industries out there that can't actually find workers. It's not just skilled workers, it's also unskilled workers. And it's in the cities, in the regions, and in rural areas. So their issue's both with long-term unemployed, but also businesses trying to find the right employees for their business. So, there are some measures in this budget around trying to improve skills, trying to improve access to employees. But while the borders remain closed, those issues will continue to be a sore point for many businesses in Australia.

Jane Rennie: And you've addressed the skills shortage issue, which I think is really interesting. But to back up just a second on unemployment, last year, the government was chasing an unemployment figure with a 5 in front of it. This year, the goal posts have moved and now we're told we're looking for an unemployment figure with a 4 in front of it, and that, expansionary policy won't change until we get that. So what's behind that change?

Gavan Ord: What's behind that change is some forecasting by treasury to say that wages growth and inflation won't actually really occur until we start to get to an unemployment rate below 5%. In an old term, we call that full employment. But now they call it [inaudible 00:09:08] or something like that. I don't know what that is. But the question is, is it achievable? I mean, the forecasts are showing that it is. The trajectory is showing right off below 5% is achievable. And it's probably achievable sometime in the next 12 months to 18 months. So that means if the treasury holds true to his statement, that they'll remove away from an expansionary budget to something else after the unemployment rate gets with a 4 in front of it, maybe the next budget will be more consolidation budget. So, this could be the last of the big spending budgets before we start to move into consolidation and possibly some austerity measures over the next four to five years.

Jane Rennie: Do you think it's fair to say then an election-

Gavan Ord: ... Four to five years.

Jane Rennie: Do you think it's fair to say, then, an election ahead of the next budget is perhaps more likely than not?

Gavan Ord: I would say you wouldn't want to head into an election having just delivered an austerity budget similar to the 2014 budget, so definitely there would be pressure within the government to have the election before the next budget. And particularly if the economy continues to perform well, that'll be the major driver. If the economy performs well, obviously the government like that to be the main theme of the upcoming election.

Jane Rennie: There was commentary after the last budget that the spending initiatives were focused in male-dominated industries and in construction, in infrastructure, and it's fair to say also that infrastructure is one of the larger recipients in this budget as well.

Gavan Ord: Yes, that's true. We still need the infrastructure. The infrastructure, it's important, but one thing we've been saying is there needs to be more investment in the soft infrastructure, and soft infrastructure, it means that digital infrastructure, the skills. And I think that's where this budget, if we're going to criticise this budget, that's one area where I think this budget is lacking, is in the delivery of the soft infrastructure, that digital infrastructure that's so important for the economic recovery and the future prosperity of Australia, which the prime minister recently said is he wants to Australia to be a leading digital nation by 2030. And I think some of the announcements in this budget really don't match that ambition. The dollars are not matching that commendable ambition, and I think that's where we can pick up and say, "Government, you need to do more around this digital, soft infrastructure."

Jane Rennie: But Gavan, 1.2 billion for the digital economy is a big chunk of change by anyone's measure. So who's missing out, because there's a whole raft of initiatives that have been proposed to assist the digital economy? Where do you see it is the shortcoming?

Gavan Ord: Well, if you break down that 1.2 billion, a lot of that goes to supporting government infrastructure, digital infrastructure like myGov and the rollout of other government technologies. A very small proportion of that money is going to small business, and I think that's around $28 million is going to directly support small business accessing advice to improve their digital skills.

We know from our own research, the small business survey, that if there was a league table, where's Australian small business sit? It sits very much at the bottom of that league table. We are the cellar dwellers in terms of digital adoption, and $28 million is not going to bring us up on that league table. It's not going to meet the prime minister's ambition of being a leading digital nation. So you talk about 1.2 billion, yes, that's the commitment over six years. But a lot of that is going towards the government's own digital infrastructure, not going towards helping business build their digital capability and digital capacity.

Elinor Kasapidis: Having said that though, I think that you have to build the road before you can get the cars on it, and the government should take the lead in building that soft infrastructure. So again, I agree, it should be more and I think it should be more inclusive of everybody who's a participant in the system, but I do also think that the government should be leading the way, making sure that services get delivered digitally and proving to business and Australians that this is something that can work, and this is important to your future and this is something that's good for your future.

And as we know, with a lot of large IT projects in government, it can be really challenging, and you learn a lot about the Australian population, their levels of openness to change, and also just how to create an environment where digital is natural, because I don't think Australia is necessarily there yet. And so that soft infrastructure investment, you can build as many real roads as possible, but in the future, they may not be as important as your digital infrastructure.

Gavan Ord: Look, I just want to add that it's really important that the government spend on their own infrastructure, their digital infrastructure, because it really is important to helping business, so that it becomes easier for business to deal with government, to deal with government once rather than multiple occasions. So it's really important that they do that, but there's two sides to the coin, and a lot of that money's going just to that government side of the equation, of the coin.

Jane Rennie: I want to pick up on a word that, Elinor, you mentioned, and that word is inclusive. We've heard a lot about the economy leaving untapped areas of potential value in women's workforce participation. So what is in this budget in terms of what makes it a female-friendly budget, if you like?

Elinor Kasapidis: I think, as the government signalled before the budget, the centrepiece is this childcare package. So the idea, of course, and it's not just for women, it's for stay-at-home parents who might be wanting to reenter the workforce, but they are in majority women, so by making things easier for them... And I think it's quite a big issue, especially in developed countries, about how you get that workforce participation rate up while making sure that your children are well cared for. So I think that by improving access to childcare, that removes one of the critical barriers for a lot of women returning to the workforce after having children. The other thing, of course, are things like the removal of the $450 cap for SG, because once again, they tend to be your part-time workers, they're not necessarily consistently earning a large amount of money each month. By removing, again, some of those barriers, that encourages the participation.

It is an interesting thing as well that there are other, more environmental factors, so the commitment to reducing domestic violence, improving access to the family law courts, and I think that once again, while it might not be articulated in this overarching, coherent women's strategy, I think that you can see elements of it starting to come together. And the government is starting to, I think, pull its narrative, talk to departments that have been in these spaces for a long time, and actually listening to their ideas and being willing to fund them and test them out.

And just going back to the ambitious jobs target, once again, it's in the government's interest. They have this jobs target, and so therefore you need to increase participation. You want to have people going into the workforce, so it's in everybody's interests, and they pay tax. The more you work, the more tax you pay, which allows the funding for a lot of these initiatives. So hopefully, it's a virtuous circle.

Jane Rennie: I think the superannuation issue and the female-friendly budget is actually quite an interesting one, because yes, one of the larger groups of beneficiaries will be women in part-time work or in lower paid industries, but I think it's fair also to say that until you address the underlying issues of gender inequality and wage inequality, the superannuation system can only do so much. And in fact, in our media release, we have reached the assessment that the government has failed to deliver a female-friendly budget. Elinor, while I've got you talking, tax incentives. Tax incentives were a really big part of last year's budget and of the government's COVID response, so what were you expecting from this budget in terms of tax, and what did Australians get?

Elinor Kasapidis: I think we were pretty happy to see the low and middle income tax offset extended. That's something that we did call for in our pre-budget submission, and it was a logical thing to do, also the low income tax offset. What's interesting about that though, the more you extend something that should have been taken away a few years ago, the more people become comfortable with that level of taxation.

So again, the government walks this line between when does temporary or extended concessions or benefits start to become a little bit more permanent in the minds of Australian taxpayers? Or rather, the less tax they pay, it becomes something that, you know, they fix their budgets to that. They might take out a mortgage based on a certain amount of income, so it becomes increasingly difficult for the government to take that away, even though it was always planned. So I think, again though, because we haven't had those real wage increases, by providing that extension of the tax offsets, it does effectively work as a bit of an extra cushion for those on lower and middle incomes.

Gavan Ord: What we hear from members sometimes, particularly around the LMITO, LMITO or Lamington, whatever they like to call it, is that it encourages people to go to their practitioner very, very early after July, and we often hear members push back and say that the returns aren't ready. Have you got any advice for people that are listening to this who might want to lodge their return early?

Elinor Kasapidis: I think that for many taxpayers it's a balancing act. I think that the ATO doesn't actually kick in its refund system for a week or so, and there is this rush to the gate. However, a lot of Australians rely on prefilled data, and if you make a mistake or you lodge before that's in, or it's incorrect and you get an amendment, you can be up for penalties, you can be up for interest, and sometimes it's just not worth those extra couple of weeks that you get the refund a bit earlier. Having said that though, a lot of people do struggle, and it means all the difference to them, and we do struggle and it means all the difference to them. And we recognise that the ATO, the government is obligated to provide those refunds in a timely manner. So it's that balance, I think, and there is that challenge in the individual space. There's the work-related expenses, the shortcut work from home deduction. The government and the ATO have done a bit to make tax time easier for a certain demographic of people. Of course, we're going to say though they don't know what they're missing out on. Did they get the best outcome? So it's about having that conversation with the tax agent before you lodge, before you just put things through to get the refund and just make sure you're getting it right.

Jane Rennie: Elinor, speaking of making tax time easier for certain demographics, there are incentives in the budget for attracting global talent to Australia. Can you tell us a bit about those?

Elinor Kasapidis: Yeah, it's a really interesting one. And again, it ties into this idea of the digital economy and just making Australia more accessible. I think COVID has really changed everybody's thinking about what is possible. And I think that the government has realised that you don't need to consult for years and years and years, and everyone has to be on board. I think they're willing to try more things. So having said that, the proposed changes to individual tax residency do come from work by the board of tax. They're trying to make things simple, trying to make it clear for talent coming over here that this is going to be your tax status. Things like employee share schemes for particularly startups and new businesses that don't have the money to pay cash to their employees. Just removing again, some of those barriers. So while it might look ad hoc or piecemeal, there is a coherent logic behind it, which is where barriers have been identified, where artificial taxing points have been created just start to strip that away and make things easier.

I think those are the main ones in the employment space, and I think it reflects a vision. We sort of talk about Silicon Valley. You think about the US government's investment and all the things that they did to build that. We're still at the very beginning of that journey, but it's amazing what Australia has pulled off when we actually really support those innovators and entrepreneurs and make things easier for them. So it's definitely a step in the right direction. You've got a digital games tax offset, you've got a patent box regime being introduced for certain medicine and biotech. I think we would like to see it to be bigger and more inclusive, again, I'll use that word. Why just medicine? Why just biotech? Why wouldn't it be for software or gaming IP? So what it does do though, is reflect a willingness of the government to try something in a controlled way, in an area that they know there is a need for it.

And hopefully, if those things are successful, we'll see those policies be broadened out to support more Australian businesses and more Australian innovation.
Jane Rennie: Now, I know you weren't expecting any big changes when it came to tax, but does it still sting a little that some of the big structural issues in our taxation system weren't addressed, and for how long can those be kicked down the road?

Now is not the time. So we talk about GST reform, we talk about corporate tax reform. There are proposals out there in relation to individuals or small business or harmonisation, but we talked earlier about needing certainty, and you are trying to have an expansionary budget, you don't want to create massive structural changes, which are unpredictable in their impacts. People just want to work with what is there. And I think there are two views. You have big reformists who really want to see a huge shift; introduce land taxes, expand the GST, raise the rate, cut the corporate tax rate to a more competitive level. But they take a lot of risk, and it's very difficult, I think, sometimes the treasury and therefore the government to assess the benefits and the costs of an approach like that.

Then there are others that say, we know where the problems in tax lie, we've become familiar with the quirks and the complexities, but let's just identify those irritants and those barriers that can be removed and benefits certain sort of areas that have been discriminated against through the tax system. So I'm not disappointed. I think that steady as she goes, now is not the time to be doing that. And the truth about GST is it's not a federal government decision, it's about states as well and how that funding model is designed. It's the same as with infrastructure spending. It's not all about the federal government, the states have to come to the table as well. And that really raises the broader issue about the federal state relationships, how they can trust each other, even when they might be on different sides of the parliament.

And I personally think that I would like to see a lot more unity and I guess cohesiveness between them in actually moving Australians forward as a whole. What do you think, Gavan?

Gavan Ord: Yeah. Going into the original question, I would have been surprised if the government actually announced big scale tax reform budget. It's just not the right time, and you're absolutely right. Maybe if the debts keep building and there's issues with recovery, maybe there's time if you use time for the government to reconsider that. But tax reform is hard. It happens very infrequently in our system of government, and you made a great point, it's a federal state issue. It can't be the federal government doing all the heavy lifting, the states have to come along with it. So there's a whole lot of things that need to be considered in that. And there has been various attempts over the last decade at big scale tax reform, the Henry Tax Review, Abbott and Turnbull's looking at tax. They really didn't go anywhere.

So the appetite for tax reform is probably not high at this point in time, but obviously that may change as economic conditions change. Look, we live in hope, I would say. We'll wait and see.

Jane Rennie: Well, there certainly was some appetite to make a couple of changes to the superannuation system and we've already talked about removing the $450 minimum income threshold for the superannuation guarantee. One or two others probably quickly worth calling out, particularly since the property market is so red hot at the moment and housing affordability, very topical, the government's going to increase the maximum voluntary contributions which can be withdrawn under the First Home Super Saver Scheme from 30,000 to $50,000. Who's the beneficiary of this measure and what's your take on it?

Elinor Kasapidis: Probably the sellers of the property, because all it does is likely just give people extra cash to bump up the prices. Having said that, again, it's complex and it comes down once again to federal and state. The supply of housing is quite often the issue, as well as money that doesn't necessarily have anywhere else to go. And so therefore it's being lent to people to buy residential properties, be they for investment or for first home. A lot of our fellow nations are grappling with the same issues with housing affordability. And I think the thing about this particular scheme was that it's undersubscribed, it hasn't necessarily resonated with those who should be taking advantage of it for a variety of reasons. The least the government could do is try to up the amount a little bit and see if it helps.

But given that it's not an often used vehicle, I don't think it's going to go much of the way to solving the problem. Having said that, as far as you can deal with the demand side, the access to capital, being able to give a slight leg up to people in Australia, that's not inherently a bad thing. There are questions about whether the superannuation system is used to do that, or whether perhaps a very similar regime that sits next to, but is not part of retirement savings should be utilised. Again, though I think that the government perhaps needs to get a little bit more insight, a little bit more of, I guess, support in understanding what the most effective intervention would be. And again, it comes down to supply. A lot of this is about making it easier to build, opening up land for people to live in, and that's not a federal government issue.

Gavan Ord: [inaudible 00:28:58]. Obviously, there's things that federal government can do. They can help with infrastructure out of suburban areas, but really is state government [inaudible 00:29:08] on the supply. I mean, I've heard people describe that particular measure tokenistic and probably it is because the low uptake, but they've got to try different things and see which ones work, which ones don't. But our view is superannuation is for retirement, not for buying a house. So maybe a similar scheme that sits outside of superannuation might be a way to go. We spoke about tax before. The Henry Tax Review propose a savings tax incentive. So maybe it's something like that. So at the moment, if you save in a bank account, assuming you're getting interest on that bank account, it's taxed at your margin rate of tax, whereas super's taxed at a much lower rate of tax. So maybe there's a way to have more equilibrium between equilibrium between how you save, whether it's through in super or outside of super.

Jane Rennie: We've talked about some of the major spending beneficiaries of this year's budget, and, Gavan, I guess I'm probably thinking some of those areas that are still doing it really tough as a result of COVID, like the tourism and travel sector. Are there areas which might be feeling a bit under done, or a bit ignored in this budget?

Gavan Ord: Well, I would say, yes, tourism, particularly those reliant on international tourism. Some of them have obviously done well with a focus on domestic tourism, but that's a very much a short term thing. Those businesses do need those international tourists coming in. You're talking about 700, 800,000 people a year that are not coming to Australia at the moment.
Gavan Ord: Also, the international education market. Our university sector is just not getting the support it needs. And I think that's a sector which has been really impacted hard. And there's a lot of actually businesses which flow off that international education sector, whether it's restaurants, cafes, all sorts of things.

So, I think that sector would also feel a bit hard done by in this budget. There's nothing really large scale to help the international education sector.

Jane Rennie: And what about for the accounting profession? Is there anything in there for the accounting profession to make their work easier?

Gavan Ord: I would say nothing specific.

Jane Rennie: Or is there anything that we think isn't in there that really should have been?

Elinor Kasapidis: I do think certainly for tax agents and many accountants, they're just breathing a sigh of relief that nothing like JobKeeper is in this year's budget. So, they're just saying, "Well, you know what? For once, it's a lot of grants, it's a lot of transfers. It's a lot of activity somewhere else and that's not inherently a bad thing."

I think that what we will see, like Gavan mentioned, the investment in government, digital capability and delivery of services digitally, is something that our profession does need to work with. It needs to understand how that can unlock value, but also where some of the threats might come from.

And I think that as we evolve into the firm of the future and trying to get automation to do compliance, so that the intelligence and the insights provided by experts and professionals, is really what people should be paying for. And that's a really challenging conversation. It takes time to go through those changes.

We work a lot with government to make sure that people understand how things are going and being really clear about the opportunities. So, it's probably not so much that there are direct impacts that I see in this budget, but this broader sense of change, digital transformation, which we've heard about for decades. It has been happening since the 1960s.

But I think the pace and the dependence and the increasing lack of choice to participate are going to be what takes us from that mining, property, infrastructure type of economy, the hard side, into your skills, your digital and your international global market based economy.

Gavan Ord: Can I just add the one thing we've asked since the start of the pandemic, is business access to some sort of assistance to go and seek professional advice. We think that's very important in the recovery. There's been no movement on that from government. We have seen that the Australian small business and family enterprise office, ASBFEO, have agreed with that and have publicly pushed that. As have the other accounting and bookkeeping bodies.

So, that's something we will keep pushing. We think the economic value of businesses accessing advice would far outweigh any cost to government. But that's one area where, in the future, we hope to see some movement from government in helping businesses pay for professional advice.

Jane Rennie: I think we've got time for one last question before we draw to a close. And obviously, there's a lot more in the budget papers that ever makes it into the treasurer speech, or that ever is reported in the media. Were there any surprises, unexpected measures, or just last things that you think our members and our listeners might like to hear about?

Gavan Ord: I'll start first on this on this one. So I think what surprised me was the patent box announcement. That's really good. Is a good start. Maybe I'll qualify that. And I'll say it's surprising because in previous years, the department of industry has come out and said, "We don't lock a patent box."

So goes to Elinor's point around government trying things in a limited way. And this is about Australia catching up with UK, Netherlands, Singapore, and Ireland who all have these patent box regimes. So I think a good start. To me, that was the one very pleasant surprise.
Gavan Ord: And also, some of the other things like looking at the changes to the employee share scheme. That's been an irritant for quite some time and the individual residency that's been an issue for quite some time. So, I think there's some positives, particularly in the tax space. The rest of it was pretty well known, so no real surprises in the rest of it.

Elinor Kasapidis: And to add to that, I think that if you want to have an innovative and entrepreneurial economy, you do need to have an innovative and entrepreneurial government. And it's always that tension. People see this quite paternalistic, "We'll look after you, we'll take all the risk away." So it's a positive thing. I think, to see a government that starts to embody the kind of characteristics that we want for our future as a nation. And I think that's so important because we have been quite conservative. We expect a lot from our government as Australians. We're very dependent on them. And sometimes I think that, I'll give credit to Morrison and Frydenberg, they've done some things in here that you wouldn't necessarily expect, and they're just a taste, a teaser of what's to come.

So, one of my thoughts was just around, how do we participate in this? How do we make sure that these incentives and things that have been included, actually get taken advantage of? And more broadly again, and I think I said it at the start, you've got the NDIS funding while there are concerns that costs are exploding. They're still tipping the money in. While it might not be exactly everything coming out of the aged care Royal Commission that we want, they are tipping money into it.

So, they are directing funding to the places that we know are needed. So, that's rather less of a surprise, but perhaps some people were a little bit sceptical about what might be done. So, it's a positive thing to see those in there.

Gavan Ord: And I'll just add, I don't think this government has shown a degree of pragmatism. So, when the pandemic broke, they started JobKeeper, things which would have gone against their natural instinct. They've run expansionary budgets. They've moved away from a backing black budget, to something that's managing their budget over the economic cycle.

They've done things which are really pragmatic. And I agree, I think it showed a, not just degree of pragmatism, but you made a good point. Also a little bit of entrepreneurship in government. I think that's a really interesting point.

Elinor Kasapidis: Because our future taxpayers have to pay for that deficit. And I think that, without creating an environment that can make money and be competitive globally and attract talent and support our youth to develop the skills that they need to compete in the next century, that debt's just going to keep on growing.

So again, it's that balancing of, you've got your expenditures. There's a lot going into health, into aged care. You've got a lot of support out there. So how do we create a tax base and a level of economic activity that will actually be able to fund it?

Jane Rennie: Gavan and Elinor, I know you both worked deep into the night to prepare a range of budget analysis and commentary. And much of this is already available on the CPA Australia website, or will be in coming days. Including a detailed edition of CPA tax news with detailed commentary on the budget, a number of articles in INTHEBLACK, a budget webinar, and discussions on member connect.

I'd like to thank Gavan and Elinor for sharing your expertise with us. And thank you to all our listeners for taking part in this conversation. For links to other budget resources, please click on the show notes. Thank you.

Outro: Thanks for listening to the CPA Australia podcast. For more information on today's episode, please visit the show notes at www.cpaaustralia.com.au/podcast. Never miss an episode by subscribing to our podcast on Apple podcasts, Spotify, or Stitcher.